9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (2) TMI 408 - AT - Service TaxLevy of service tax - incidental charges - token charges and postage charges recovered - charges recovered for disbursement of money - Revenue alleged that part of the interest collected by the appellants, over and above 18% of interest, at times referred to as incidental charges are leviable to service tax - extended period of limitation - penalties. Whether the Interest charged from the customers above 18% per annum initially recorded in internal records under the head Incidental Charges till September 2008 and as Risk Interest from October 2008 and from 2013-14 the entire amount of interest as Interest on Gold Loan is liable to Service Tax? - HELD THAT - It is not disputed that the appellants are a NBFC and are engaged in collection of deposits and advancing of loans against security inter alia in the form of gold. The appellants charge interest on the loans advanced. It is the case of the department that prior to October 2008, appellants have collected some incidental charges which is taxable to service tax and for the period after October 2008, the appellants have collected risk interest / interest on gold loan over and above the prescribed rate of 18% as per RBI. For the period prior to October 2008, it is the contention of the appellant that in view of the restrictions, imposed by the Kerala Government, that no money lender will charge interest over and above 2% than the interest charged by commercial banks, they have shown a portion of the interest as incidental charges. However, after October 2008, the same is referred to and accounted as risk interest / interest on gold loans. As long as the consideration received for advancement of loans is interest in whatever manner it is accounted for and at whatever rate it is collected, the same is not chargeable to service tax. Also the learned Commissioner vide order dated 6.7.2018 (Revenue appeal No.ST/21862/2018) has rightly concluded that the demand of service tax on interest of gold loans is not sustainable. The demand on account of interest is set aside irrespective of their nomenclature i.e., incidental charges/risk interest/interest on gold loan. Whether Token Charges and Postage Charges collected as reimbursement of expenses incurred from the customers are an additional consideration for the loans and advances under the Banking and other Financial Services attracting levy of service tax? - HELD THAT - Having gone through the order, it is found that the learned Commissioner seeks to distinguish between the recoverable expenses discussed in the above case and the case of the appellant. It would be na ve to come to such a conclusion only because the reimbursable expenses discussed in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT relate to travel cost, hotel stay, transportation, etc., and in the instant case, it is about token charges, postal charges, etc. The distinguishing is only on the categories of expenses and not on the principle of exclusion of reimbursable expenses and thus, not acceptable. It is also found that there have been number of judgments on the excludability of reimbursable expenses. Therefore, the demand on the token charges, postal charges, etc., would not sustain and the same needs to be set aside. Demand of service tax - money transfer service - HELD THAT - In the light of the principles of taxation, all the players at one end cannot be treated as exporters and all the players at the other end cannot be treated as importers. If the appellants are rendering service to an Indian entity who is in turn engaged in export of services, law requires that the appellant pay service tax and their client is eligible to avail credit of the same and refund if applicable. There is no short-cut of the procedures. Since because the ultimate beneficiary is abroad, it cannot be claimed that the appellants are exporting services. Neither the place of rendering of the activity nor the type of service rendered by the appellants nor the recipient of such service are stationed abroad. Therefore, we are not inclined to consider such service as an export of service - the demand of service tax on the money transfer service rendered by the appellants requires to be upheld. Liability of service tax - air travel agent / rail travel agent / travel agent services - commission on insurance - HELD THAT - The Revenue pleads that no documentary evidence whatsoever has been given by the appellants to the adjudicating authority. The appellants, on the contrary, submit that they have placed relevant challans on record. The only way to resolve the issue is to send it back for the purpose of verification. Therefore, the case remanded to the adjudicating authority for the limited purpose of verifying the claim of the appellant that they have discharged the liability of service tax in respect of air travel agent / rail travel agent / travel agent services and in respect of commission on insurance. Appeal allowed in part and part matter on remand.
Issues Involved:
1. Service tax liability on interest charged above 18% per annum. 2. Service tax on token charges and postage charges. 3. Taxability of money transfer service as a representative/sub-representative. 4. Applicability of Notification No.19/2015-ST dated 14.10.2015 for service tax exemption. 5. Service tax on commission earned on air/rail/bus travel agent services. 6. Invocation of extended period of limitation and imposition of penalties. Detailed Analysis: 1. Service Tax Liability on Interest Charged Above 18% Per Annum: The appellants, a Non-Banking Financial Company (NBFC), collected interest on gold loans, including amounts labeled as "incidental charges" and "risk interest." The department alleged these additional charges were taxable. The appellants argued that these were interest components and not service fees. The tribunal found that interest, regardless of nomenclature, is not subject to service tax as per Section 65B(30) and Rule 6(2)(iv) of the Service Tax (Determination of Value) Rules, 2006. The tribunal upheld the view that the entire interest, including amounts above 18%, is not taxable. 2. Service Tax on Token Charges and Postage Charges: The appellants collected token and postage charges as reimbursement for expenses incurred. The tribunal held that these charges are reimbursable expenses and are not subject to service tax, referencing the Supreme Court's decision in the case of Intercontinental Consultants and Technocrats Pvt Limited. 3. Taxability of Money Transfer Service as a Representative/Sub-Representative: The appellants acted as sub-representatives for M/s. Wall Street Finance Ltd., facilitating money transfers for M/s. Western Union. The tribunal concluded that the service rendered to M/s. Wall Street Finance Ltd. is not an export of service since the immediate beneficiary is an Indian entity. Therefore, the service is taxable. 4. Applicability of Notification No.19/2015-ST Dated 14.10.2015 for Service Tax Exemption: The tribunal found that Notification No.19/2015-ST, which exempts service tax for certain money transfer services, is not applicable to the appellants as their service does not qualify as an export of service. 5. Service Tax on Commission Earned on Air/Rail/Bus Travel Agent Services: The appellants claimed they had discharged service tax liabilities on commissions earned from travel agency services. The tribunal remanded the matter for verification by the adjudicating authority to confirm whether the appellants had indeed paid the service tax. 6. Invocation of Extended Period of Limitation and Imposition of Penalties: The tribunal set aside all penalties imposed, noting that the issues were under dispute and there was no intent to evade tax. The tribunal also found that the extended period for issuing the show-cause notice was not applicable. Conclusion: (i) The demands related to incidental charges/risk interest/interest on gold loans were set aside. (ii) The demands for token charges and postage charges were also set aside. (iii) The demand for service tax on money transfer services was upheld. (iv) The issue of service tax on travel agency commissions was remanded for verification. (v) All penalties were set aside. (vi) The departmental appeal was dismissed. (Order pronounced in the Open Court on 01.02.2022)
|
